DuPont Analysis: Overview, Formula, Example

By Kristi Waterworth – Updated Aug 28, 2025 at 8:29 PM | Fact-checked by Frank Bass

Key Points

DuPont analysis links ROE to profitability, asset efficiency, and financial leverage.
It breaks down ROE to assess each business component, aiding targeted improvements.
Understanding DuPont helps investors pinpoint strengths and weaknesses in companies.

As a shareholder, you probably want to know how well the company you're invested in is using your money. After all, shareholders' equity is a big contributor to many companies' financials. Return on equity (ROE) and the DuPont analysis that can be performed on this metric are one way to find out. Read on to learn how to look more deeply into this metric.

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A hand holding a magnifying glass up to some financial statements. — Image source: Getty Images.

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A good ROE is generally between 15% and 20% but will vary by sector. More importantly, if this company's competitors had ROEs of 12.5% and 15%, you'd know that it likely manages its money much better than they do. You'd then be able to use the DuPont analysis to see where the breakdown is for the competition by comparing each section of the formula.

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About the Author

Kristi Waterworth has been a contributing real estate and financial expert at The Motley Fool, covering real estate, investing, and personal finance topics, since 2020. Kristi has been interviewed by various TV media outlets and podcasts for her real estate investing expertise – from residential real estate to digital real estate and everything in between. Kristi’s journalist career spans over 25 years, and she has written about real estate investing, homeownership, and home construction specifically for the last decade. She was also previously a licensed Realtor and general building contractor before the Great Recession and housing market collapse. She holds a bachelor’s degree in American history from Columbia College in Missouri.

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